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We suggest investors look for opportunities in emerging markets. We like investing in emerging markets for three reasons. First, emerging market stocks are cheaper based on current P/E ratios. Second, emerging countries have higher GDP growth rates. Third, emerging market currencies are usually undervalued, and they will eventually catch up with the U.S. dollar. Emerging markets can be very volatile and the losses for short term investors may be dramatic especially in down trends. However, long term investors with diversified portfolios can protect themselves from dollar inflation and benefit from emerging markets’ higher growth rates.

American Depository Receipts (ADRs) are one of the most effective instruments to invest in foreign markets. First, ADRs provide convenience in terms of trading and reporting of those trades to the IRS. Moreover, the transaction costs for ADR trades are much lower compared with what they’d be if executed through local exchanges. Also, ADRs allow investors not to be trapped into huge spreads most banks charge when converting U.S. dollars to the stocks’ local currency. These benefits are visible when trading in emerging markets’ stocks.

We compiled a list of 17 ADRs with tremendous growth rates that also pay fat dividend checks regularly. The market data are sourced from Fidelity. All companies in this list have market capitalizations above $1 billion, a P/E ratio smaller than 20, 12-month dividend yield of at least 4% and EPS growth of 10% over the last five years.

Dividend Yield

EPS Growth (5 year Historical

BBVA Banco Frances SA

BFR

12.32%

50.21%

Royal KPN NV.

OTCPK:KKPNY

10.43%

14.72%

Telecom Argentina SA

TEO

9.28%

10.21%

Partner Communications Company

PTNR

9.09%

36.66%

Telefonica SA

TEF

8.82%

22.53%

E.ON AG

OTCQX:EONGY

7.59%

12.21%

Astrazeneca Plc.

AZN

7.06%

13.87%

Westpac Banking Corp.

WBK

6.92%

12.74%

Banco Macro SA

BMA

6.46%

24.17%

British American Tobacco Plc.

BTI

5.89%

11.69%

Companhia Energetica Minas Gerais

CIG

5.78%

26.86%

Enersis SA

ENI

5.70%

51.76%

Chunghwa Telecom Co.

CHT

4.93%

10.53%

Prudential Plc.

PUK

4.63%

10.01%

Companhia Siderurgica Nacional

SID

4.47%

11.31%

CPFL Energia SA

CPL

4.36%

15.71%

Unilever Plc.

UL

4.04%

15.23%

We believe one of the best ways to invest in foreign markets is through ADRs. Ten ADRs with the highest dividend yields are as follows:

BBVA Banco Frances SA (NYSE:BFR): BBVA Banco Frances SA is a financial services company operating in Argentina. BFR had a 12.32% dividend yield last year. BFR also had an EPS Growth of 50.21% over the past 5 year. Over the past 2 years, the stock gained more than 200%. BFR has a market cap of $1.52B and P/E Ratio of 4.90.

Royal KPN NV (OTCPK:KKPNY): Royal KPN NV is a telecommunications company providing ICT services in Netherlands, Belgium, and Germany. KKPNY had a 10.43% dividend yield last year. Over the past 5 years, KKPNY had an EPS Growth of 14.72% and returned 70%. KKPNY has a market cap of $22.24B and P/E Ratio of 9.51.

Telecom Argentina SA (NYSE:TEO): Telecom Argentina SA is a telecommunications company operating in Argentina. TEO had a 9.28% dividend yield last year. Over the past 5 years, TEO had an EPS Growth of 10.21%. The stock price doubled since 2005. TEO has a current P/E Ratio of 9.10.

Partner Communications Company (NASDAQ:PTNR): Partner Communications Company is a telecommunications company providing mobile telephone services in Israel. PTNR had a 9.09% dividend yield last year. Over the past 5 years, PTNR had an EPS Growth of 36.66%. The stock price also doubled since 2005. PTNR has a market cap of $2.57B and P/E Ratio of 7.79.

Telefonica SA (NYSE:TEF): Telefonica SA is a telecommunications company providing both fixed and mobile telephone services primarily in Spain. TEF had an 8.82% dividend yield last year. Over the past 5 years, TEF had an EPS Growth of 22.53%. Trailing 12 months, the stock has 171% payout ratio. TEF has a market cap of $107.54B and P/E Ratio of 7.93.

E.ON AG (OTCQX:EONGY): E.ON AG is a German energy company generating and distributing electricity in Europe and North America. EONGY had a 7.59% dividend yield last year. Over the past 5 years, EONGY had an EPS Growth of 12.21%. EONGY has a market cap of $52.40B and P/E Ratio of 6.64.

Astrazeneca Plc. (NYSE:AZN): Astrazeneca Plc. is a British pharmaceutical company providing medicines worldwide. AZN had a 7.06% dividend yield last year. Over the past 5 years, AZN had an EPS Growth of 13.87%. Dividends also more than doubled from $1.025 (2.5%) to $2.5 (7%) since 2005. AZN has a market cap of $71.19B and P/E Ratio of 7.93. Jim Simons’ Renaissance and Israel Englander’s Millennium Management had small stakes in AZN at the end of March.

Westpac Banking Corp. (NYSE:WBK): Westpac Banking Corp. is a financial services company operating in Australia and New Zealand. WBK had a 6.92% dividend yield last year. WBK had an EPS Growth of 12.74% and returned 200% over the past 5 years. WBK has a market cap of $69.18B and P/E Ratio of 8.94.

Banco Macro SA (NYSE:BMA): Banco Macro SA is a financial services company providing banking services in Argentina. BMA had a 6.46% dividend yield last year. Over the past 5 years, BMA had an EPS Growth of 24.17%. The stock price doubled since 2009. BMA has a market cap of $1.85B and P/E Ratio of 7.40.

British American Tobacco Plc. (NYSEMKT:BTI): British American Tobacco Plc. is a British company providing tobacco products worldwide. BTI had a 5.89% dividend yield last year. Over the past 5 years, BTI had an EPS Growth of 11.69%. The stock price is up more than 200% since 2005. BTI has a market cap of $89.32B. Tom Russo’s Gardner Russo & Gardner had more than $160 Million invested in BTI at the end of March.

Source: 17 High Dividend ADRs With Tremendous Growth Rates